IRA 60-Day Rule Exceptions

The IRS allows waivers for the 60-day rollover requirement if unforeseen circumstances caused the missed deadline, granting additional time for rollover completion.

Navigating the world of Individual Retirement Accounts (IRAs) can be complex, particularly when it comes to the 60-day rollover rule. This rule mandates that certain transactions, like withdrawals and rollovers, must be completed within 60 days to avoid tax penalties. But what happens if you miss this deadline? Thankfully, the IRS provides some exceptions to help taxpayers avoid penalties in unforeseen circumstances. Let’s explore these exceptions and understand how they can benefit you

What are the Self-Directed IRA rollover rules?

The IRA 60-day rule stipulates that certain transactions must be completed within 60 days to avoid tax penalties, mainly applicable to withdrawals and rollovers.

For instance, when withdrawing from an IRA to roll over into another retirement account, you typically have 60 days to finalize the process.

Exceptions to the IRA 60-Day Rule:

  1. IRS Waiver: If unforeseen circumstances hinder rollover completion within 60 days, petition the IRS for a waiver, granting additional time without penalties.
  1. Financial Institution Error: IRS may extend relief if the financial institution’s error delays or fails the rollover process.
  1. Military Service: Military personnel deployed in combat zones receive an extension of the 60-day rollover period, plus 180 days upon return.
  1. Automatic Rollover: Retirement plan termination permits an automatic rollover of funds, exempting from the 60-day rule.
  1. Direct Rollover: Directly transferring funds between retirement accounts avoids the 60-day deadline, typically between financial institutions.

Learn More

Understanding the 60-day rollover rule and its exceptions is vital for anyone managing an IRA. These exceptions, whether due to unforeseen circumstances, financial institution errors, military service, automatic rollovers, or direct rollovers, provide essential safeguards to help you navigate potential pitfalls. By staying informed and seeking professional advice when necessary, you can effectively manage your retirement funds and avoid unnecessary penalties. Always be proactive and mindful of the timelines and rules to ensure that your hard-earned savings continue to grow and support your financial future.

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